The case is about Natureview Farms, Inc., a small yogurt manufacturer that sold refrigerated cup yogurt developed from all natural ingredients. It has established a strong brand name known for its high quality and taste. The company produces 8-oz. cups, 32-oz. cups and multipack yogurt products in a variety of flavors. Currently it sold only through its established natural foods channel. Now, the management team of the company wants to find a strategy to grow its revenues to $20 million by the end of 2001 from $13 million the company reported in 1999. To fulfill this objective, the management comes up with three options that it could choose from among which two options require Natureview to enter the supermarket channel which is an unexploited area till now with potential benefits and risks and the third option was to stick to the natural foods channel with whom they have had a long term partnership with till now. The senior management team thus evaluates the potential benefits and risks associated with each option that will help them meet the goal of revenue growth.
Yogurt was consumed by approximately 40% of the U.S. population, with women comprising the majority of yogurt purchases. The consumers mostly preferred 6-oz. and 8-oz. yogurt cups with the deciding factors of purchase being package type/size, taste, flavor, price, freshness, ingredients and whether the product was organic. The different variants are also available including multipacks. Recently, children were also becoming the target for the fast growing multipacks. These included six-packs of 4-oz. cup servings and yogurt packaged in tubes. The yogurt industry is growing at a great pace and thus there lies a tremendous potential for various market players, also the top market player use supermarket channel for distribution and major top two players takes control of half of the market share. Natureview Farms, Inc.
Natureview produced twelve refrigerated yogurt flavors in 8-oz. cups and four flavors in 32-oz. cups. They had also started exploring multipack yogurt products. They had established themselves as a major brand in the natural foods channel and had developed strong relationships with leading natural foods retailers, including the chains Whole Foods and Wild Oats. Natureview has succeeded in the natural food channel mainly because of its image as a healthy product. Also the product is available in various sizes to cater to the varying demands of the consumers. Nature view sold natural yogurt prepared from a family yogurt recipe. The recipe used natural ingredients which brought a natural thickness and texture to the product as compared to its competitors who used artificial ingredients to do the same. Because of this natural process and ingredients, Natureview Farm’s yogurt had an average shelf life of 50 days as compared to the 30-day shelf life of its competitors which gave it a competitive edge. Natureview Farm was known for great taste and high quality served through its yogurt. In addition to it, their creative, low cost and “guerilla marketing” style helped them to gain their market share. Another key factor for Nature view’s success was that majority of their sales were through natural food stores and it held a 24% market share in them. It acts as an advantage because of incurring low promotional costs as they don’t face stiff competition from their competitors. Also it helps them to charge higher for their product. Another important factor that comes into play is that many women purchase it as a substitute of lunch so it can be a added advantage to help them to have more consumers as product’s ingredients, organic, health promoting qualities and flavors play a major deciding factor in the buying process and Natureview excels in them.
The major challenge in front of Natureview Farm, Inc. currently was to find a path to grow its revenues to $20 million before the...